Decentralized finance (DeFi) – Origins and Promise

Decentralized finance Learning

Bitcoin was invented as a hedge against the devaluation of fiat currencies by central banks. Over the last 11 years since it’s existence, Bitcoin has fulfilled this role elegantly despite the many attempts by mainstream media to discredit it’s potential as a credible store of value. Despite constant attacks on Bitcoin, the cryptocurrency has stood the test of time very well and is now on the verge of becoming the default currency of the Internet. While it’s status as a reserve currency for the world might be premature at the moment, Bitcoin is silently showing it’s promise wherever and whenever there is an economic crisis.

Bitcoin’s role is particularly more evident in countries like Venezuala and Greece where the value of the local currency has plunged by many order of magnitude overnight, leaving the populace in financial hardship. It might be easy to dismiss that such a scenario will never occur in developed nations, but one has to peer in-depth into the bowels of the financial system to acquire a good understanding of central banking and it’s limitations in dealing with rapidly increasing national debt. In addition, the addiction to gross domestic product (GDP) growth and it’s close relation to political posturing by governments pose additional challenges to the fiscal policy capacity that central banks hold. It is a system that is designed to drain wealth from the masses. When the economic machinery screeches to a grinding halt, many will be deprived of their basic needs leading to social unrest and breakdown of societal structures.

Decentralized finance holds great potential for financial progress and inclusion. Photo credits to Dawid Zawila at

Humanity may be fortunate that an unknown figure, a genius of sorts has invented the answer to this issue. With Bitcoin and related technologies, the society has the opportunity to migrate from a system that is reliant on debt to one that is based on sound money (hard money) to fund it’s progress into the future. Accompanying this possibility are the other properties of the technology where reliance on third party is eliminated and value can be transferred seamlessly without censorship. It requires a paradigm shift in the thought process and resultant actions of every individual. A system based on hard-money which can’t be devalued easily calls for careful consideration of every action on the part of the individual and institutions.

Subscribe to our newsletter!

Recall the era where finance was based off gold and everything was valued by ounces of gold. Sure, the progress may have been slower but when there was one it was real progress unlike the inflated growth based of debt that we are seeing today. Inflated growth is an illusion and deviation from reality. Inflated growth creates inflationary spending power through acquisition of services and material goods with little incremental value to the buyer. Ever heard the term ‘consumerism’? Cheap and easy credit fuels consumerism with detrimental effects on the environment, health and global peace.

Piercing the fabric of consumerism

Let’s take a closer look at each one of this. Systematic conditioning to consumerism over everything else takes place from time when you were young and fosters an ever increasing appetite for consumption. Possessing the newest and flashiest of products becomes the norm and falling behind peers hurts your psychology subconsciously. Recent ‘minimalism’ movement is the counter-narrative to consumerism and one that is deeply rooted in environmentalism than principles of hard-money. However, we can’t argue enough that consumerism places an ever increasing strain on resources from the environment.

On the context of health and consumerism, it is becoming evident that most of the chronic diseases of the 20th century relates closely to lifestyle factors and the environment. Consumerism and availability of cheap credit exposes the individual to the sweet offerings of modern life. Increased caloric consumption has been one of the major defining causes of diabetes, obesity, malignancies and other equally devastating diseases. Modern healthcare is hardly the answer to these issues but we can’t understate the efficiency of financing and marketing of modern healthcare that leads you to believe otherwise. The solution to a healthier population lies within the education and re-conditioning of the individual to healthier choices. An impossible task with the current inflationary financial system. The hard-currency system on the other hand, has the potential to eradicate the consumption culture and empower individuals to adopt healthier choices in every facet of their life.

Perhaps the greatest benefit that society could harness from a reliance on hard-money system will be the limitations in the power of the state. Without a doubt, all modern governments and their officials exhibit the following characteristic: rent-seeking, sense of entitlement, bloated and inefficient processes or systems, favouritism, feudalism and many other traits that hinders the free-market mechanism. There is no denying that certain government programs such as mass vaccination and eradication of poverty has had tremendous benefits to society but this comes at the expense of it’s ability to wage wars and create artificial barriers to humanity’s future progress. In fact, one should even begin to open their mind to the notion of a post-state construct given the historical evidence in favour of progress when a civilization transitions from an old ideology to a new one. A state with little influence on monetary policy would be one where individual liberties, sovereignty and privacy are held higher. It also implies significant limitation to the ability of the state to fund it’s war machinery. We now have the technology for this transition to take place in the form of Bitcoin and decentralized finance.

The year 2020 might be the perfect time to sow the seeds of decentralized finance. Development activity within Bitcoin and Ethereum has never seen greater momentum before and a variety of wonderful and innovative products will be released this year. In anticipation of these, we at will feature ground-breaking projects from the DeFi ecosystem and how you as the ‘self-sovereign’ individual could harness these technologies for greater freedom and growth albeit one that does not rely on inflationary economics or ‘rent-seeking’ third parties.

Please follow and like us:

With an early exposure to computers and the Internet, Nathan has always had a keen interest in technology. His educational background is in the medical field but that does not stop him from dabbling with computers. Upon learning about blockchain and its potential role for humanity, Nathan got deeply involved into this field as both an investor and as an advocate.

Leave a Reply